The lawsuit references alleged “false and misleading” statements made by Musk about taking the publicly-traded company private. It also claims he “knew or was reckless in not knowing” that his statements were false and/or misleading.

FOX Business reported last month that the SEC ramped up its investigation into the automaker after Musk tweeted that he was considering taking the company private at $420 per share and that funding had been “secured.”

That news sent shares soaring.

Musk later revealed in a blog post that there was no concrete funding deal in place and in fact he was still openly talking to investors, which sparked speculation that he was trying to bump the stock price.

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The billionaire businessman later decided that it was in the company’s best interest to remain private.

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The SEC said Musk misled investors into believing the privatization transaction was all but final, pending a shareholder vote.

“In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the suit claims, adding that the resulting market disruption harmed investors.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in a statement. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

The SEC is seeking penalties including disgorgement of any ill-gotten gains, civil penalties and a bar against Musk from serving as an officer or director of a public company in the future.

During after-hours trading shares of Tesla fell 9.7 percent to $277 per share.

Dow Jones is reporting the SEC said in its complaint that "Musk stated that he rounded up the price to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price,'" the SEC's complaint says. The number "420" is sometimes associated with marijuana.

Tesla is also reportedly being investigated by the Department of Justice for the same comment.

A Tesla spokesperson said earlier this month that the company received a voluntary request for documents from the DOJ following Musk's announcement about taking the company private, and Tesla has been "cooperative."

Last month, Musk said during an interview with The New York Times that he wrote the tweet in his car on the way to the airport and no one reviewed it.

The billionaire businessman said at the time he did not regret sending the post, having previously offered the rationale via blog post that he wanted all of his shareholders to be made aware of the situation simultaneously.